VKW Bands Modify is a complex indicator, but with quite good reviews on the MQL5 traders forum. It provides for a relatively non-standard approach – a strategy for trading pending orders. It is based on another interesting tool – Metro indicator. Both of them show the beginning and end of the trend. Pending orders are placed at the moment of crossing the indicator lines, which you will see in the practical example below. Recall that you can write in the comments that you are interested in the strategy, and we will send you an indicator template for free by email.
VKW Bands Modify – we earn on the breakdown of extrema
There is no detailed description of the indicator formula. More precisely, it is difficult to find it, and it does not make sense. It is rarely optimized – only one version is known. VKW Bands Modify is an oscillator with dynamic channel boundaries. If the indicator lines are at the very top, then we should expect a price reduction, below – an increase. The disadvantage is some delay, which can be filtered by a trend indicator.
Trading conditions for trading pending orders:
- timeframe – M15. It is better not to use the indicator on long timeframes;
- asset – EUR / USD. Exotic couples use does not make sense;
- VKW Bands Modify: Range Period = 25, Smooth Period = 3, Smooth Mode = 0 (smoothing periods).
The principles of opening a long position:
- Green Color line crossed Blue Color from top to bottom;
- The Green Color line has gone a few points towards the Red Color line and is preparing to turn towards Blue Color. Price goes up;
- on the nearest candles, an easily distinguishable local extremum (max) emerges.
Buy Stop set above the local extremum by 3 points at the moment when the price and the Green Color line turned up. Stop-loss is better to put a long – 10-30 points. The target profit level is 10 points, upon reaching which 50% of the position is closed. We transfer the safety order to the breakeven line. The second 50% of the deal is closed when the Green Color line reaches Blue Color from top to bottom. If the touch does not occur, the balance of the transaction is folded manually.
The principles of opening a short position:
- Green Color line crossed the red one upwards;
- The Green Color line has gone some distance towards the Blue Color line and is preparing to turn towards Red Color. The price goes down;
- on the nearest candles, an easily distinguishable local extremum (min) emerges.
Sell Stop set below the local extremum by 3 points at the moment when the price and the Green Color line turned down.
The strategy of trading on pending orders is reduced to the analog of working with oscillators, only in the opposite direction. In a classic strategy, trades are opened at the moment when the indicator comes out of the top or bottom. But this gives a lot of false signals – there are cases when the oscillator returns to its zone. In this strategy, we are waiting for the price to reverse in the direction of the previous strong direction and place an order in anticipation of the local maximum or minimum being reached.
Signals do not appear very often, because the strategy is more suitable as an additional one.